Imagine if modern accounting was an invention of the past decade. Given the heavy use of computer technology, it’s very likely that the entire discipline would be regarded as part of Information Technology.
Now consider the amount of non-ledger information that your company uses. Business leaders are rapidly changing their view of information from seeing it as a tool to monitor their business to thinking of it as being the business. Information exists in every product, service and activity in every corner of your business. It is stored in documents, databases, spreadsheets, applications and the heads of the staff who run the business. It is potentially one of, if not the, largest asset held by many organisations.
The trouble is, this quantity of information has only appeared in a little over a decade and has been entirely enabled as a result of new computer technology. No wonder many businesses treat information as a problem for the Information Technology (IT) department to sort out. But is that really the right part of the business to drive strategic decisions?
CIO, CDO, CFO, COO who really owns the data?
Most Chief Information Officers (CIOs) have ambitions of making the “I” in their title more than just an aspiration, but there is a strong argument that such a change is actually too much of a change from the facilities and operational management that makes up 90% of their job function.
Internationally, a number of organisations have introduced the concept of a Chief Data Officer (CDO) to take responsibility for non-ledger data across the enterprise. The CDO typically doesn’t sit in IT, but rather has an operational alignment. Most organisations that have implemented a CDO position have done so as a way of putting governance over data and compliance activities, the most common of which has been Basel II risk activities in banks worldwide. Like their IT cousins, the CDO may find it a substantial stretch to move from an operations role to elevating information to an executive topic.
That leaves two “big table” roles: the Chief Financial Officer and the Chief Operating Officer. Depending on personalities both have the ability to leverage the huge mass of information held.
The argument for CFO information leadership
With the growth of information have also come advances in Information Management techniques. Most practitioners agree that successful organisations leverage the principles of Information Economics and monetise information in a way that drives positive behaviours.
With lines of business being measured by individual ledgers, it is important that the information asset that they hold on behalf of the company is reflected both on the balance sheet but also in the transactions that they perform. It is only in this way that organisations can really reward and encourage the sharing of customer, product or other information in a way that benefits the whole business.
Just as importantly, this linkage helps drive a reconciliation of non-ledger data with items that are more traditionally governed to the satisfaction of the board. As more non-ledger data finds its way into external reporting, this is becoming critical. Businesses only need to consider carbon reporting to understand the importance of combining ledger and non-ledger data.
With such a close tie between the good management of information and the processes used to measure the financial health of the business, it may make sense in many organisations to apply the same disciplines and extend the capabilities of the finance team.